Correlation Between Brompton Lifeco and Allied Properties

Can any of the company-specific risk be diversified away by investing in both Brompton Lifeco and Allied Properties at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Brompton Lifeco and Allied Properties into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Brompton Lifeco Split and Allied Properties Real, you can compare the effects of market volatilities on Brompton Lifeco and Allied Properties and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Brompton Lifeco with a short position of Allied Properties. Check out your portfolio center. Please also check ongoing floating volatility patterns of Brompton Lifeco and Allied Properties.

Diversification Opportunities for Brompton Lifeco and Allied Properties

-0.31

Correlation Coefficient

Brompton Lifeco  Allied Properties

Very good diversification

The 3 months correlation between Brompton and Allied is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Brompton Lifeco Split and Allied Properties Real in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Allied Properties Real and Brompton Lifeco is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Brompton Lifeco Split are associated (or correlated) with Allied Properties. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Allied Properties Real has no effect on the direction of Brompton Lifeco i.e., Brompton Lifeco and Allied Properties go up and down completely randomly.

Pair Corralation between Brompton Lifeco and Allied Properties

Assuming the 90 days trading horizon Brompton Lifeco Split is expected to generate 1.2 times more return on investment than Allied Properties. However, Brompton Lifeco is 1.2 times more volatile than Allied Properties Real. It trades about 0.12 of its potential returns per unit of risk. Allied Properties Real is currently generating about -0.01 per unit of risk. If you would invest  333.00  in Brompton Lifeco Split on September 12, 2024 and sell it today you would earn a total of  697.00  from holding Brompton Lifeco Split or generate 209.31% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Brompton Lifeco Split  vs.  Allied Properties Real

Brompton Lifeco Split

Risk-Adjusted Performance

22 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Brompton Lifeco Split are ranked lower than 22 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Brompton Lifeco displayed solid returns over the last few months and may actually be approaching a breakup point.

Allied Properties Real

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Allied Properties Real are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Allied Properties is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Brompton Lifeco and Allied Properties

The main advantage of trading using opposite Brompton Lifeco and Allied Properties positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Brompton Lifeco position performs unexpectedly, Allied Properties can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Allied Properties will offset losses from the drop in Allied Properties' long position.

The idea behind Brompton Lifeco Split and Allied Properties Real pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Bonds Directory module to find actively traded corporate debentures issued by US companies.